The battle to offer the lowest rate loan comes as the Reserve
Bank meets today. It is widely tipped that it will announce a 25
basis point jump on Wednesday - the first rise in 15 months.

While Wizard's Rate Breaker and Resi's equivalent Great Rate
home loans do not offer many features, such as a draw-down facility
or the ability to pay the mortgage off sooner, they do give first
home buyers cheap entry to the property market.

A Nielsen survey, commissioned by Wizard, found that the number
of potential first home buyers rose by a third to 423,000 in the
three months to September. After announcing the rate war on Sunday,
Wizard chairman Mark Bouris yesterday rejected suggestions that a
Reserve rate rise would quash demand from first home buyers.

"Higher interest rates will reduce the amount they can afford to
borrow, but it could work in their favour in the longer term if
rising rates lead to a general dampening of residential property
prices," he said.

Resi's national manager for consumer advocacy, Lisa Montgomery,
said most potential home buyers would have factored in at least a
percentage point rise.

"Home buyers are better informed than ever before about how to
manage and pay off their home loans," she said. "Consequently, a
large proportion of home buyers have a buffer zone in place which
would lessen the impact of a rate rise."